Adrian Lapas posted about a debt settlement company is out there contacting people currently in Chapter 13 bankruptcy and claiming their case was dismissed.
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This is a slimy tactic tried by debt settlement companies to steal from you. That’s right, other lawyers and professionals will call debt settlement a poor product, a bad decision, or a lousy product. I call them crooks, and here’s why.
Debt settlement companies use misleading advertising (that is being kind) to get people to call them.
Every day on the radio I hear about a government bailout of credit card companies.
They have the nerve to claim that the government is requiring them to clear their books in order to qualify for this bailout.
Baloney!
There is no credit card bailout, there is no government bailout, there is no Obama plan for credit cards. There just isn’t.
Why would a credit card company need a bailout? The average interest rate on a credit card is around 20%. If you owe $1000 on your credit card, that company makes $200 per month on you interest alone. Multiply that by a couple of million and you can see why credit card companies own the big buildings.
You are better off lighting your own money on fire than working with a debt settlement company.
The first $2500 from debt settlement goes right into their coffers so they can run more radio ads to steal from more people.
If you burned your money, at the very least you wouldn’t be helping them pay to defraud others.
Now I’m not suggesting that you should light hundred dollar bills on fire (and if you truly have money to burn, feel free to drop it off), especially if you are struggling with debt.
If you are under a mountain of credit card debt and don’t know where to go, don’t trust the debt settlement companies. If you are in trouble with credit card debt, you need a lawyer.
{ 2 comments… read them below or add one }
J. You are correct that there are some companies that are misusing the intent of the credit card debt relief act, and the bailout money given to credit card companies and suggesting that the government has created a credit card bailout program. Currently there is not Government bailout program for consumers.
Let me politely correct a couple of your assumptions.
The Government has given credit card companies certain tax incentives that allow them to write down debt. This has greatly increased the receptiveness on the part of credit card companies to negotiate or significantly reduce a debt using a debt settlement service, or on your own.
Credit Card companies are vast businesses with a number of investments outside of credit cards. Citigroup for example offers home and Auto loans. Both of which have had the highest default rate in 50 years. Credit card default rates also skyrocketed. At the same time the instruments by which they obtain credit/money to lend to consumers dried up. This is why the Government bailout out this companies. They were going to go under. – Note I do not endorse the bank bailouts, but this is the logic behind why the bailouts occured.
My scummy debt settlement company works only with companies who use attornies to conduct their settlement service. Nearly 70% of all settlment companies have legal backing to provide services. Most states have a requirement to be licesensed to do business in their state, or have an attorney model.
The companies we work with do not require a $2,500 up front fee. There are fees, however they range. More often companies are offering $250 start up fees and a variety of success fees for reducing the debt.
My sneaky web-site states on ever web page that it is NOT a government program. We also state on other pages that this is a negotiation process.
I do not deny there has been plenty of issues with debt settlement and consumers need to be careful. However, the industry has matured, many of the poor players are gone or are going under and what we have left over is a viable service for the right financial situation.
Just my opinion – Regards Jacob
Jacob,
1. False advertising is false advertising. There is no government program requiring banks to write-down credit card debt as your company’s commercials claim, if there are please link to them.
2. Citigroup is to responsible lending as etch-a-sketch is to art.
3. Even if you take $250 up front, it takes about $1500 before your companies do anything for the client.
4. If the poor players are gone than this type of notice should never have been sent.
5. At best you market a lousy service and collect unreasonable fees for it. Like my EMT instructor used to say, you tell people they are going to hell but they are going to enjoy the trip.
In the interest of full disclosure, Jacob’s email eminated from a debt settlement company. They are getting nervous that the word will get out, and I’m certain that with great Bankruptcy lawyers like my friend Dan Foster in the Western District, my friend Karen Ware in Maryland , my friend and mentor Jay Fleischman in New York, and lots of other great bankruptcy attorneys in this country that debt settlement companies days are numbered.